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New Jersey Gov. Murphy's Economic Plan Calls for Boosting Property Development

Proposal Seeks $500 Million Venture Capital Fund, Aid For Cities and Brownfields
October 2, 2018
New Jersey Gov. Phil Murphy Monday outlined his master plan for the state’s economic development during at address at the ON3 redevelopment, on the former Hoffmann-La Roche campus, on the border of Nutley and Clifton, New Jersey.

New Jersey Gov. Phil Murphy is trying to replace the state’s old system for awarding tax breaks with an economic development master plan that focuses on innovation-driven businesses such as technology firms and local startups that will create new jobs using a $500 venture capital fund to boost the flow of private investment to the state.

Murphy, almost nine months into his first term as governor, unveiled Monday a bevy of new initiatives - including encouraging development in new federal Opportunity Zones, redevelopment in contaminated brownfields, and aiding small businesses -- that his administration will institute as the Garden State attempts to regain its status as a creator of new technologies.

More than 500 people crowded on the campus of ON3, the redevelopment of the former campus of pharma giant Hoffmann-La Roche, on the Nutley-Clifton border in New Jersey, to give his address.

Area real estate officials have waited to hear Murphy's plans to revamp state tax incentives, which they claim are an important tool to attract companies to New Jersey, a high-cost state. During his election campaign, Murphy blasted the program as a giveaway to corporations under his predecessor, Chris Christie.

"We will put our focus on the high-wage and high-growth innovation sectors that have the potential to bring the greatest investment and most jobs into our state - clean energy, life sciences, advanced manufacturing, food and beverage, advanced transportation and logistics, information and high-tech, film and digital media, and finance and insurance," Murphy said during his economic address. "We will make New Jersey a true state of Innovation, and no community will be left behind."

The governor is taking a multipronged approach to reviving New Jersey’s economy, but one of its linchpins is the formation of what’s been named the Innovation Evergreen Fund. That $500 million pool will aim to spur "the return of venture capital into our state, pairing the proceeds from competitive auctions of new state tax credits with private venture capital funds to make joint investments in a diverse array of New Jersey-based startups," the governor said.

He said corporations will bid on new state Economic Development Authority tax credits, and "the winning bidders will be the ones who offer both the best price and best commitment to help entrepreneurs through mentorship, networking, and other resources. The Innovation Evergreen Fund will then invest the auction proceeds, alongside funds from venture capital firms, into promising start-ups with the potential to scale up and create jobs ... Our fund will be the first to enlist some of the very corporations who participate as real partners in the innovation ecosystem."

The governor also spoke about the federal Opportunity Zone program, which gives businesses that invest in designated census tracts, urban and rural areas with high poverty rates, the ability to defer and pay less in capital gains taxes. New Jersey has 169 Opportunity Zones, according to the governor.

"The Department of Community Affairs, under Lieutenant Governor Sheila Oliver, is developing a ‘One-Stop Shop’ to help guide our Opportunity Zone municipalities," Murphy said. "The New Jersey Redevelopment Authority is identifying ‘Ready to Go’ investment projects. This is one way in which we will work with our communities to reestablish the state as a true partner for future success."

During his remarks the governor unveiled a brownfields program that will include a new remediation and development tax credit and a dedicated state EDA loan fund.

"Sites that were part of a past generation’s progress will be cleaned up so they can be put back to work for the next, whether as the site of a new business, a new school or affordable housing, or a park that enhances both quality of life and nearby property values," Murphy said.

Another new initiative, NJ Aspire, will offer tax credits that "will be another catalyst for investments in commercial, residential, and mixed-use development in our cities and downtowns, and in suburban neighborhoods served by mass transit," according to the governor.

"NJ Aspire will facilitate the conversion of surface parking lots, vacant and abandoned lots, and other underutilized properties into job-creating and tax-generating development opportunities," Murphy said.

"It will help to bring market-rate housing to distressed urban areas while also ensuring mixed-income and affordable housing in our suburbs," the governor said. "And, to build communities -- and not just places to live -- we will put an additional focus on tourism, arts, and culture-related projects."

The state plans to introduce an historic-preservation tax credit program "to complement the federal credits currently being invested here to ensure that while we grow, we do so in a smart way that properly knits together our past with our future," the governor said.

The state EDA worked with the Governor’s Office and other stakeholders to craft the economic plan, and will play a major role in the administration of its initiatives.

Initial reaction to the governor’s economic plan from several real estate officials was positive.

"Growing the number of quality high-paying jobs in the right locations is the best way to ensure that all our
residents can achieve their dreams,” Michael DeMarco, chief executive of Mack-Cali Realty Corp., New Jersey’s largest real estate investment trust, said in a statement. “We fully support the governor's efforts."

Wasseem Boraie, vice president of Boraie Development in New Brunswick, New Jersey, said the "economic policy, which is stronger, fairer and more transparent, will further the growth of mixed-income/mixed-use residential and innovative commercial office use throughout the state."

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